Utilisation of public funds
Utilisation of public funds · Challenges of corruption
12 min read · Updated 2026-05-25
What are Public funds?
Public funds are the monies raised through taxes, borrowings and non-tax revenue that flow into the Consolidated Fund of India under Article 266 and can leave it only through an Appropriation Act. Their utilisation passes through mobilisation, appropriation, sanction, disbursement and end-delivery, and can leak at every node; the 2nd ARC estimated corruption's cost at about 2 percent of GDP.
The story
In December 1985, Prime Minister Rajiv Gandhi stood at the Bombay Congress centenary session and uttered a sentence that has echoed through every Indian budget debate since: "Of every rupee spent by the government for the welfare of the poor, only fifteen paise reaches the intended beneficiary." The other 85 paise — roughly Rs 85 of every Rs 100 — vanished into a black hole of leakage, ghost beneficiaries, padded muster rolls, and outright theft.
Three and a half decades later, an academic studying the Direct Benefit Transfer (DBT) programme found that after Aadhaar-linked transfers replaced cash and cheques in the Public Distribution System, leakage in some states fell from 40% to under 10%. The same study found that across all DBT-routed schemes, India had saved Rs 2.7 lakh crore in cumulative leakage from 2014 to 2022 — a sum greater than the entire annual budget of MGNREGA, ICDS, and mid-day meal combined.
Two numbers — 15 paise and Rs 2.7 lakh crore — tell the same story: every rupee that doesn't reach a citizen is a rupee stolen from the next school, the next vaccine, the next pension. This unit examines how public funds are utilised, where they leak, and what the modern toolkit of plug-leakage looks like.
Why this matters for UPSC
GS-IV has tested utilization of public funds and corruption directly in 2014, 2018, 2021, and 2023, usually framed as a case study on diversion of welfare funds or padding of bills. GS-II (Governance) and GS-III (Economy) overlap. Prelims rarely tests it directly but expects familiarity with CAG, Lokpal, PCA. Interview boards probe it through situational dilemmas: "a contractor offers you 5% kickback to clear a bill."